Stocks Hold Gains As Close Nears; Chips Skid
Stocks are modestly higher after struggling to find direction much of the day amid light volume and ahead of a week filled with economic data.
The Dow Jones Industrial Averagewas up more than 40 points after ending the previous session modestly higher.
Chevron, Merck,and IBM rose. Hewlett-Packard and American Express fell.
The S&P 500and Nasdaq were slightly higher. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 22.
Consumer discretionary, energy and health care gained, while utilities and technology slipped.
All the major indexes are up more than 4 percent for the month so far, although volume has been light. Fewer than 1 billion shares have changed hands daily on the New York Stock Exchange this week.
"Volume is still very, very light in this market, and news is light as well," said Alan Gayle, senior investment strategist at RidgeWorth Investments. "The market is drifting higher in the absence of any definitive, fundamental news."
In the technology sector, HP shares fell more than 1 percent following news U.S. investigators are widening their probe of alleged kickbacks paid to Russian authorities by employees of a Hewlett-Packard subsidiary in Germany.
Dell slumped after Morgan Stanley downgraded their rating on the PC maker to "underweight" from "equalweight."
Cisco fell slightly after brokerage RBC downgraded its rating on the tech giant to "outperform" from "top pick" and cut its price target to $26 from $28.
Apple fell slightly after the iPod maker, in a reversal, made it easier for third parties to build applications and software for the iPhone and the iPad.
Chipmakers also took a beating in the wake of several analyst downgrades and weak outlooks. National Semiconductor tumbled after the chipmaker issued a weak outlook. In addition, at least four brokerages cut their price targets on the firm.
Similarly, Texas Instruments slipped after the semiconductor giant narrowed its earnings and revenue outlook but kept the mid-point of its forecast range. Stifel Nicolaus and Jefferies both cut their price targets on IT to $29 from $32 and $37, respectively.
Meanwhile, Nokia rose after news it has replaced its CEO with a Microsoft executive, to better fight fierce competition in the market for smartphones. Microsoft shares slipped. RBC raised its rating on Nokia to "outperform" from "sector perform" and raised its price target to $14 from $12.
And Facebook overtook Google in minutes spent by users, according to new data from researchers at comScore.
Research In Motion , meanwhile, slipped amid rumors the smartphone maker may eventually be acquired by Microsoft. Speculators said Microsoft has so much cash that the acquisition is conceivable.
On the energy front, BP was slightly higher after the oil giant said will delay the release of third-quarter results by a week to add the costs associated with the Gulf of Mexico oil spill.
PG&E shares plunged nearly 7 percent after the electric company's natural gas pipeline explosion ripped through a neighborhood near San Francisco, starting fires that burned more than 50 homes.
Most of the oil drillers were higher, including Transocean and Diamond Offshore .
Oil rose above $76 a barrel, sparked by the shutdown on of a major Enbridge pipeline to the Midwest and rising gasoline cash prices in the Chicago region and the U.S. Gulf Coast.
Health care stocks got a boost from Stifel Nicolaus, which began to cover several biotech companies with "buy" ratings, citing strong demand.
Acorda Therapeutics soared more than 4 percent, while Celgene was up more than 3 percent. Rival Amgen also rose, while Human Genome Sciences fell slightly.
Lululemon Athletica soared more than 10 percent after the yoga and running-wear retailer raised its full-year financial forecasts as it reported its quarterly profit more than doubled.
Moody's Investors Service surged, leading the S&P 500 higher after ratings upgrades. Piper Jaffray cited improving near-term revenue trends and an easing of regulatory concerns for the ratings agency. Shares of McGraw-Hill , parent of rival Standard & Poor's, also rose.
In M&A news, 3M said it will buy medical products company Arizant for $810 million in cash. The purchase is 3M's third purchase in recent weeks.
In Europe, investors wondered whether Deutsche Bank's $11.4 billion stock sale would be needed because of new Basel III rules forcing banks to get more capital.
In the day's economic news, the government reported earlier Friday that U.S. wholesale inventories soared 1.3 percent in July, much better than the forecasted 0.5 percent. While positive, Gayle at RidgeWorth Investments described the growth as "transitory."
"Our expectation is those gains won’t continue as businesses become more comfortable with what they own on hand," Gayle said.
President Obama held a press conference where he faulted Republicans for stalling progress on turning around the economy. Obama also announced long-time economic adviser, Austan Goolsbee, will replace Christina Romer as chairman of the Council of Economic Advisers. Romer returned to teaching at the University of California, Berkeley.
Next week also features several key economic releases. The two “market movers” will be Tuesday's retail sales and Wednesday's industrial production, said Peter Cardillo, chief market economist at Avalon Partners.
Cardillo said he is optimistic the numbers will reveal the worst news on the economy is past. If the data proves him right, the market will move higher, he said.
“I think there’s a shift in sentiment, from being overly negative to a more cautious outlook,” Cardillo said.
On the Calendar Next Week:
MONDAY: Treasury budget
TUESDAY: NFIB small business optimism, retail sales, IBD/TIPP economic optimism index, business inventories, UN General Assembly, API weekly report; before-the-bell earnings from Kroger and Best Buy
WEDNESDAY: MBA mortgage applications, Empire State manufacturing survey, import and export prices, industrial production, weekly oil inventories
THURSDAY: PPI, current account, jobless claims, Phili Fed survey; before-the-bell earnings from FedEx, after-the-bell earnings from Oracle and Research In Motion
FRIDAY: CPI, consumer sentiment
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